Iron ore, steel futures tumble over China’s property woes
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Iron ore futures declined after data showed China’s property sector contracted further in August, with a seasonal demand boost usually seen beginning September not yet in sight. Further reports indicated that property investment in the world’s largest steel producer fell at the fastest pace since December 2021 as new home prices declined 1.3 percent, suffering its heaviest loss since 2015.
The most-traded January iron ore on China’s Dalian Commodity Exchange was down 1.2 percent at 715 yuan or $101.89 a tonne.
On the Singapore Exchange, the steelmaking ingredient’s benchmark October iron ore lost 2.6 percent to $98.05 a tonne, trading below $100 for the first time in two weeks.
Rebar on the Shanghai Futures Exchange (ShFE) fell 1.6 percent, hot-rolled coil declined 1.3 percent, and stainless steel lost 1.9 percent.
In contrast, other steelmaking inputs recovered from early losses, with Dalian coking coal DJMcv1 and coke DCJcv1 gaining 0.6 percent and 0.1 percent, respectively.
Analysts noted that the recent data sapped market confidence that had propped up China’s ferrous complex in recent days, underpinned by the government’s intensified support for the ailing property sector and hopes of additional policy action to shore up the economy.
“The anticipated ‘Golden September, Silver October’ is not yet seen,” J.P.Morgan analysts said in a note, referring to the seasonal pick-up in construction activity and property demand in China.
Policymakers in the world’s second largest economy have announced over 50 economic support measures since late May and last week stressed that this quarter was a critical time for policy move. However, market results show that traders largely shrugged off China’s faster-than-expected growth in factory output and retail sales in August.
Analysts said they expect COVID-19 disruptions to business activity in China to keep investors cautious. Meanwhile, China’s crude steel output rose 3 percent in August from a month earlier as steel mills resumed operations in anticipation of better demand. The latest data from China’s statistics bureau showed that the country churned out 83.87 million tonnes of steel in August, up from 81.43 million tonnes recorded in July.